No Fall in Interest Rates This Year, Forecasts CBI
Byline: BY RUSSELL LYNCH Daily Post Correspondent
THE CBI said today it no longer believed interest rates would fall this year, as the Bank of England moves to tackle inflationary pressures in the economy.
The business lobby group's latest quarterly survey predicts interest rates will rise to 5.5% in the next quarter and remain unchanged during 2008.
Its more cautious stance contrasts with its December forecast - made before the Bank's shock rate rise in January - which suggested rates could fall this autumn.
The CBI predicted higher than expected growth of 2.9% in 2007, up 0.2% from its December estimate, but a fall back to 2.6% in 2008 as controls on public expenditure kick in.
But the lobby group also fired a shot at the Government, saying Chancellor Gordon Brown should move to protect the higher than expected growth by reducing the burden of business taxes.
The organisation is pushing for the burden to be cut by pounds 9bn by 2010/11.
CBI deputy director-general John Cridland said: "If we want to maintain these levels in the longer term, we need to ensure the right conditions are in place for business to prosper."
Home owners could also come under more long-term pressure as consumer demand and rising prices put the Bank of England's inflation targets under strain, the CBI said.While the business lobby group's latest economic forecast predicts Consumer Price Index inflation could fall as low as 1. …